>> announcer: this is "nightly business report," with tyler mathisen and sue herera. record finish again. the dow closes at yet another all-time high as caterpillar and 3m ride the wave of a strengthening global economy. cheap tickets? airlines are adding seats. that means fares could drop. good news for flyers. but a worrying development if you own airline shares. and the amazon race. why the competition for amazon's second headquarters is taking a new secretive turn. those stories and more tonight on "nightly business report," for thursday, january 25th. good evening, everyone, and welcome. i'm tyler mathisen. sue herera has the evening off. the dow closed at a record for the tenth time this year.

for the s&p 500, it was its 13th record finish in just 17 trading days so far. earnings helped drive the blue chip index as some of the world's biggest global companies easily beat profit expectations. they also said things are looking fourp the rhett of the year. at one point today more than 30% of all of the 30 dow components from at all-time highs. here are the closing numbers. the dow jones industrial average advanced 140 points to 26,392. nasdaq fell nearly four, though. but the s&p 500 rose by about two. once again, the dollar came into play, adding some volatility to the trading day. now yesterday we told but the dollar's impact on the stock market after the u.s. treasury secretary said a weak dollar benefits u.s. trade. today, other officials chimed in, including president trump. here's steve liesman. >> reporter: it was a wild ride

for the dollar today sent falling and then flying by comments first from a european officials and then from the president of the united states. european central bank president draghi got the dollar off on the first leg of its round trip journey can comments indicating he didn't care much that the euro recently strengthen against the greenback. >> we don't target exchange rates. we say exchange rates are important for growth and for prizability. now, in certain movements in the exchange rates to the extent that are justified by the strengthening of the economy are part of nature. >> the euro surned from 124 to 125 against the dollar a level not seen since 2014. the way traders saw it draghi didn't much mind the strength and didn't sound like he was going to do anything about it. but someone did mind. his name as president donald trump. speaking to cnbc exclusively in

davos, trump came down firmly on the side of a strong dollar. >> the dollar is going to get stronger and stronger. ultimately, i want to see a strong dollar. >> the effect was immediate and dramatic. within an hour the dollar regained all it lost on the day and then some. underpinning the nervous action. these are nervous times for economy traders and the global economy. treasury secretary steve mnuchin step out of protocol and said a weaker dollar could help u.s. trade. true but not said often by a cabinet official. the president also told cnbc he doesn't like talking about the dollar and that quote nobody should be talking about it. perhaps he is pushing his administration to walk the old line wherefore official purpose at least the only good dollar is a strong dollar. for "nightly business report" i'm steve liesman. now to the earnings we

mentioned earlier. caterpillar had a quarter few investors saw coming. the largest heavy-duty equipment maker reported profits that trounced expectations and gave upbeat guidance for the full year. that lifted shares. morgan brennan has more on the big cat's blowout quarter. >> reporter: at four years of sales declines the world's biggest maker of heavy machining snapping its losing streak reporting revenue in 2017 as mining and construction rebounded around the globe. jim you thinkelby saying economic indicators are positive and he expects a strong start to the new year. >> we are expecting to capitalize on sales momentum or quickly adjust should conditions change. we also plan to grow the company by offering expanded services. >> reporter: after years long slumps tied to the collapse of

commodity prices sales are picking up across all of caterpillar's major segments. construction, mining are expected to grow this year. just as a restructuring within the company has taken root. analysts say caterpillar is poised to prosper. >> two or three years ago -- it's just interesting that they had been in and still are in the longest and worst revenue downturn in all of cat's history. and to come out of it is inclusive of the great depression. the mining oil and gas bubbles that popped, they happened to be low. since they have come out of it they have got production systems working, capital to actually manufacture the product that's coming back and there is a lot of pent up demand. >> reporter: also in focus, tax reform. taking a one time charge of $2.5 billion to write-off changes in the way they have to account for previous losses and also overseas cash. overall, though, the company says cash reform is a long term toev, an endless add that

caterpillar could benefit not just a lower rate but also from full expensing, which incentivizes other companies to buy more equipment. but there are challenges. executives hope to get a resolution to an ongoing tax investigation tied to a swiss subsidiary soon. and as prices recover costs to make all those machines are rising. still it was a strong quarter for a blue chip stock that has already soared 70% in the past year. for "nightly business report" i'm morgan brennan. fellow dow component 3m also topped earnings and revenue expectations thanks to a strengthening economy across the globe. 3m almost raised its outlook for the year and boosted its dividend. it helped lift shares 2% to a new high. late today the dow component intel blew past revenue forecasts. they reported growth in the data center operations.

intel also raised its full year revenue forecast even though fallout from security flaws to could hurt future results. though it didn't matter in afterhours trait trading. josh lipton. >> a number that investors focused on in this report, $5.6 billion. that was how much revenue the data center groupen generated in the quarter. that's the unit used for selling chips into servers. a investor who covers intel says that was unexpected and shows pricing power in the quarter. roland notes that visitors focus on that business division because it is the company's highest margin business and the fastest growing one. client computing group, the division that sells chips for pcs came in at $9 billion. a dip of 2% but also better than expected. for "nightly business report," i'm josh lipton. president trump arrived in davos, switzerland to attend the world economic forum today.

he is scheduled to deliver a major address tomorrow to sell among other things his america first agenda to other heads of state and global business leaders. today he dined with european corporate chieftains including the heads of adidas, siemen's and nestle. -- has been a topic of conferring. in an interview with concernan, the president took a different tack on trade and the massive pacific trade deal that he symbolically pulled out of last year. >> i like bilateral because when you are disappointed you terminate. had he you are in 12 other countries, you don't have that same option. but somebody asked me the other day would i do tpp. here's my answer. i will give you a big story. i would do tpp if we made a much better deal than we had. the deal was a horrible deal. the del was horrible. nafta is a horrible deal.

we are rear negotiating it. i may terminate it. i run around and tell stadiums full of people i will terminate or renegotiate. >> are you opening the door to tpp. >> i'm only saying i would do tpp if we would get a substantially better deal. the way it was structured was horrible. if we did a substantially better deal i would be open to tpp. >> that's interesting. >> are you surprised to hear me say that? >> yeah i am a little taken aback. >> don't be surprised. it was a bad deal like the iran deal. >> nafta, can you give me an indication the way you are leaning? a lot of the ceos that have been on here they all seem to acknowledge it's 30 years later and there is a lot of changes to make a lot of sense but not to abandon the deal. >> we have a trade deficit with mexico, mexico. $71 billion a year. we have a trade deficit with canada of a substantial amount

of money. i have a number but they keep arguing it. i won't tell you it's $17 million. okay? we have a trade deficit with canada. we have a massive trade deficit with mexico. got to do something. we can't continue to do this? >> are you leaning towards staying in or would you really go after -- >> i always said during the campaign. as you noticed and as you actually said a couple times i have fulfilled a lot of what i have said. i'm only here a year. i think i have four years, and maybe another four years, okay we'll keep going is see what happens. joe. >> yeah. >> we have a $71 billion trade deficit with exmexico. we have got to do something. we can't have that. will it be renegotiated? we are trying right now with bob light houser and the whole group. i think we have a good chance but we'll see what happens. >> overall the mood among business people in davos has been exceptionally up beat, a change from prior years. here's a sampling of executive views on globalization evolving attitudes toward it, and a

cautionary opinion on optimism overall. >> my hope is that we continue what has been basically a global view of the world that suggest that open borders without open -- in an untoward or an awkward way for us have served us all collectively as well. clurg in the u.s. >> can global organizations taking a break from developments in countries. i think development is good. we see it daily. >> people are optimistic about the global economy right now. it worries me how optimistic they are. usually when you get this optimistic something goes wrong down the road quickly. >> as for the economy, the imf increased its outlook for growth overall. time to look at some of today's upgrades and down grades in the marketplace. da dadeson putting a $1800 price tag on amazon reiterating its buy rating saying the recent

whole foods acquisition coupled with their technology is a huge growth opportunity. shares were up to $1377.95. shares of best buy have been downgraded to market perform from outperform. they could experience negative same store sales in the upcoming quarter because of the lack of a highly anticipated product launch or to. they upped the price to $82. shares were off today at $26.77. >> michael's was upgraded from market perform to outperform and hiked its price target there to $32 from $23. the reason? michael's strength across a number of categories and it is expected to benefit from the lower tax rates that start to kick up. in shares up nearly 3% to $27.16 and pivotal research initiates

coverage on foot locker saying the shoe fits. buy it. it says it believes the retailer is in a better position than its competitors at a time when consumers are making more purchases on line. foot locker shares rose marginal to $52.44. >> and still ahead, airline stocks have been on a steady climb over the past few years. but is the sector about to hit some turbulence?

the selloff in the airline sector extended into this second day now. we reported yesterday that investors became concerned that united continental's expansion plans could trigger an industry fair war. today american airlines and southwest said they also have plans to expand capacity. larger flights and more flights can put downward pressure on fares but they said they are not concerned about adding extra seats. >> they are the thins that happen as a industry continues to ma you are too. its maturity around what has become a much more rational structure in terms of long term competitiveness. >> we are very well prepared to compete. we have a great plan for 2018. we are looking forward to continuing positive unit revenue trends even with this competitive capacity threat. >> american and southwest both topped earnings expectations. jet blue came up a little bit

shy. united, which led the group lower yesterday fell again today by more than 4%. are those air far war concerns legitimate? as fuel costs rise where can we expect to see the airlines make up that lost revenue. joining us seth kaplan, a managing director of the industry publication "airline weekly" nice to have you back again. i thought airlines were doing pretty welling ie in terms of profitability by keeping capacity down and running flights really close to full. am i wrong about in that? >> that's been the playbook the past decade. match capacity very precisely with demand. you are right. the thing is, though, if all that mattered was hey cutting capacity to squeeze up unit revenues, airlines would shrink forever.

why wouldn't you do that. when you shrink capacity you put up union costs and become less productive. what united is basically saying is this has gone too far, they feel there is room to grow a little bit more in their case and have a beneficial impact on unit costs, push those down more than the seg negative impact it's going to have on unit revenues. >> so if they do that, will there be as -- as they add capacity, will there be downward pressure on fares? if so, how much? >> well, they sort of say that there is basically -- not all growth is created equal. some of their growth is in market. they started slights from houston to sydney. that puts a whole lot of seat mile capacity as it's called into the marketplace. but it's not going to have a broad impact on -- you know, encore markets, flight from new york to chicago isn't impacted in that. and also, they have added a lot in smaller cities, focused

actually, adding in placing like wilmington north carolina. well that's not going to start a fare war with spirit. spirit is not there. overall, investors aren't wrong. this is supply and demand economics. the more supply that's in the marketplace yes it will put downward pressure on airfares at a time tyler when because you have rising air fares airlines are feeling squeezed cost wise. what united is basically saying is yeah, that's the problem, now there are more cost problems than revenue problems basically and they are trying to get their hands around that. >> seth we have to leave it there. seth kaplan with airline weekly. starbucks brewed up a mixed quarter. they topped earnings expectations but disappointed the street with its revenue and same store sales growth. global sales did pick up but still lagged analyst's estimates. shares fell in the extended section and finished the regular day down fractionally, they closed at $60.55.

>> tupperware maker newell brand says it plans to evaluate strategic options for at least ten of its brand as it looks to focus on its core businesses. the restructuring could cut in half the number of factories and warehouses the consumer company ukts operates. they slashed its earnings and sales, and outlook shares got hammered. they fell 20% to $24.81. >> union pacific said higher fuel prices caused its operating ratio to rise in the last quarter. what is that, the company's operating expenses as a percentage of its revenue. lower is per here. earnings were in line with expectations, and revenue topped estimates. the railroad operator's ceo also said he hopes the new tax law will lead to more jobs. >> what i think the big impact of tax reform is going to be is in our markets, it really does make our customers more competitive, both globally and

locally. that should generate increased demanded. as demand increases we will be using that cash to invest so we can handle that growth and grow, hiring people again at very attractive wages. >> shares of union pacific down 5% on the session at 1 $33.60. >> upscale furniture maker ethan allen reported stronger than expected earnings but said a drop in store traffic caused same store sales and written orders to fall. the company plans a new marketing campaign and hopes it will bring in more customers. >> we will now feel comfortable that our products and offerings are in good shape, that our manufacturing is better, and we are going to increase our advertising this quarter by 33%. >> ethan allen shares fell 7% to $25.05. and the grocery chain operator kroger reportedly in talks with the chinese e-commerce giant

alibaba about working together. reuter's says the discussions are at an early stage and may not result in any kind of partnership. but kroger shares rose more than 2.5% to $30.26. alibaba gained 1%. they finished the day at $198.33. and to the economy now, where the number of americans filing for unemployment benefits rebounded from the a 45-year low last week. jobless claims for state unemployment benefits increased $17,000 to a seasonally adjusted $233,000. that rise, less than expected, and points to a labor market that is still getting stronger. a key part of the economy of course is housing. and the housing market slowed in december. new home sales last month fell sharply. so did existing home sales, which we reported on yesterday. is this just a winter slump or a warning toer the spring? diana olick reports tonight from washington. >> reporter: weather it was older homes or newly built

homes, fewer of each sold in december. and you can't ly blame cold weather. for new home sales the smallest drop was actually in the northeast where weather was worst. >> three bedrooms. >> reporter: for existing homes, the problem is likely lack of supply more than weather. the number of listings in december was 10% lower compared to a we are ago. that's the lowest supply since the realtors began tracking it in 1999. low supply continues to push home prices higher. >> a lot of folks out there looking to buy a home are already facing affordable challenges and we are expecting mortgage rates to go up, certainly, not down for any reason. so it's going to squeeze affordability going forward. so it's already a tough market, especially for first-time buyers. >> reporter: mortgage rates jumped significantly since the start of this year with the 30-year ticked at its high eggs level since last sprin. that could have buyers in the short-term trying get in fast before rates rise further. >> the increases we have seen so

far have only gotten people off the couch and into the market. people are wore worrying that they need to hurry and buy a house now before rates go up further. >> reporter: that could mean an early start to the usually businessing spring housing market. as in right now. builders especially could see a jump in demand as mortgage rates rise because newly built homes are more expensive and potential buyers have even less wiggle room in their budget. >> the home builder len ar's mortgage subsidiary is under investigation by the justice department. federal investigators subpoenaed records related to the underwriting of federal housing administration loans. lennar made the disclosure in its annual report filed with the s.e.c. coming up, amazon's hunt for a new home enters a new phase and takes a secretive turn. i'm scott cohen at the u.s. conference of mayors winter meeting in washington, where the sweepstakes to win amazon's second headquarters is a big

topic of conversation. but a lot of those conversations are about to dry up. we'll tell you why, coming up on "nightly business report." the competition for amazon's $5 billion second headquarters project is entering a new phase now that the company has narrowed the 238 initial bidders down to just 20. all of the hype sounding the start of process is going away,

and with it, a lot of the transparency. scott cohn reports tonight from washington. ♪ >> reporter: the hype has been impossible to miss. state and local officials outdoing themselves to impress amazon. now with the field down to 20, finalists flock to the u.s. conference of mayors meeting in washington all for some good natured trash talk. >> there is a lot of talking going on. what you will find among these mayors is we are all pulling for american cities. >> reporter: amazon is now telling them to tone it down. phase two of the process will be conducted largely in secret. the company seeking more detailed information about what each city haas to offer in terms of work force, location, and incentives. >> it is a very secretive process. and obviously we are bound by confidentiality. but you know, we are continuing to do what we did last week after the announcement. which is sell miami, and

broadcast to the world not just to the made to that miami is the place to be for amazon. >> reporter: but not included in the conversation for the most part, the taxpayers who could foot the bill. most of the finalists, like philadelphia, have been silent on the details of their bids, with no apologies. >> if i were to lay out now what i think we should offer, it would be criticized and, you know, looked at and determined whether or not that's good or bad. >> reporter: the secrecy yaes marks a more conventional approach to economic development. most deals are negotiated outside the public eye. like the fox connell electronics plant in wisconsin. by the time a state economic board finally got the chance to review the $3 billion incentive package last year many of the details had already been worked out and announced in a white house ceremony. the stake in the amazon race are even higher with a few places

already showing their hands, like new jersey and maryland talking about billions of dollars in tax breaks for a project that will transform wherever it winds up. mayors are vowing not to be drawn into a bidding war. for now, control of that belongs to amazon. scott cohn for "nightly business report," in washington. market recap now. on wall street, the dow closed at its tenth record close of the year. the blue chip index advanced 140 points to 26,392. nasdaq dipped nearly four. but the s&p 500 added about two. it also finished at a record. and that is "nightly business report" for tonight. i'm tyler mathisen. thank you for joining us. have a great evening, everybody. we'll see you right back here tomorrow night. ♪

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